CoStar Group initiated with an Underweight at Wells Fargo

Wells Fargo initiated coverage of CoStar Group (CSGP) with an Underweight rating and $65 price target. Although CoStar’s core businesses should benefit from a rebound in commercial real estate, the stock’s valuation and Street estimates “look lofty” with heavy investment still needed for Homes.com, the analyst tells investors in a research note. The firm says that while Homes.com offers better neighborhood information and photos, it does not see enough differentiation to draw users away from Zillow (Z) (ZG, Z), “which has a strong first-mover advantage and network effects.”